Category: Netflix

Name and describe the organization’s Industry

Netflix is an organization that is applying modern technology in its activities and is currently involved in the Movie industry where it carries out activities that allow its clients to subscribe for paid mailing of movies and delivery of the movies at their homes. The organization is hence involved in the provision of services that allow clients to select the movies of their choices from any of the sources they can use, and then they request for the delivery of such movies in any format, especially in the Digital Video Discs (DVD) format (Thompson 1).

Describe the Dominant Economic Characteristics of the Industry

The organization carries out different economic activities in the movie industry. The main economic activity, however, is the fact that the company offers delivery services to its clients who order for their favorite movies and then pay for the delivery services that allow them to be delivered to their doorsteps. In this way, the clients are able to make payment arrangements for the services, mainly before the delivery, in any of the agreed modes of money transfer and bill payment services.

Usually, since the clients subscribe to the organization at a given fee, then they usually become full members, and under some organizations, they are able to order for the movies and have them delivered, then make the payments for the deliveries at a future agreed date, usually at a given time interval such as weekly, monthly or after a few months (Thompson 1).

The movie industry, on the other side, has various economic activities that are very significant to the whole economy. The Industry has various departments that are the main consumers of different electronic gadgets. Research has shown that more than 85% of the population in the country purchased a specific electronic product within a timeframe of one year. This implies that the organizations dealing with the manufacture and supply of electronic products were able to gain a lot of revenue from the sales of such products.

On the other hand, the movies industry contributed to the development of the economy through the provision of employment opportunities, and hence individuals who were involved in the sales and distribution of the movies were able to earn a living out of the sales, distribution, production of more copies through downloaded movies and delivery of movies to the consumers’ doorsteps.

The Industry also contributed to the advancement of technology through the invention of better gadgets and techniques for the viewing of movies through different outlets such as internet viewing and different ranges of players. In this way, different people, especially households, could be able to view movies from different places rather than the movie theaters. They could be able to access and view movies from anywhere using laptops, internet connections, from their vehicles, houses, and anywhere else, they could access the movies (Thompson 3).

Describe the major Driving Forces of the Industry

There are different driving forces that are associated with the movie industry and which allow the Industry to grow faster and with a lot of diversity. The main driving force, however, is an innovation which has led to the establishment of better and more convenient and efficient electronic gadgets that allow easier and faster access and viewing of movies, the discovery of better modes of carriage for the movies such as high-capacity DVDs, the internet and carrying the movies in soft copy using other modes of storage.

The Industry has also been advanced by the establishment of different modes of viewing of the movies that allow the movies to be viewed from different locations such as households, vehicles, offices, and any other location even while mobile. This allows the Industry to have a diverse platform of consumers of the movies, a fact that increases the demand for the products, consequently motivating the increase of the supply of the products.

Identify & assess the strengths of the Industry’s Competitive Forces; Summarize the industry impacts

There were many factors that contributed to the overall strength of the organization’s activities and its competitive advantage against its main competitors who included the movie download websites, local movie outlets and hire service providers, TV channels which offered different movies for viewing, and cable movie channels. The main strength for the organization against its competitors was that unlike most of its competitors, it was able to sell the movies to its clients and even deliver them to their doorsteps at a cheap and friendly fee. Most of the organizations that offered home delivery services such as cable TVs and the internet were quite expensive and required more gadgets that required a high initial cost of installation and running.

The other strength of the company is that it delivered products that offered more flexibility to its clients. The clients were able to view the movies using different electronic gadgets that they already had purchased and could even be able to view them using the gadgets that were being newly invented and supplied in the markets using the newer and more advanced technological advancements, unlike the case in some formats of movies that could not be viewed using any gadget but were rather more specific to a few gadgets.

The organization also had the advantage of using better, more convenient, and yet cheaper modes of delivery of products to the clients, unlike the rest of the modes of delivery. The use of mailing services was very convenient as it allowed delivery of the products directly to the clients’ doorsteps in a very reliable, fast, safe, and cheap way. This hence made this form of delivery more preferable, unlike most of the other modes of delivery that were either very costly or demanding in terms of access gadgets and modes of viewing.

Identify and describe the Key Success Factors for the Industry

The organization and the industry as a whole had a lot of factors that could have been identified as having been contributors to success for the Industry. One of the key factors that could have led to the success of the Industry was the growing demand for the purchase and viewing of movies among different and diverse people of different generations and age-groups.

In this industry, the rising demand for movies had resulted from the increased purchases of different technological gadgets and advanced technology as well as the invention of different and better applications of technology that could allow different viewers to access the movies from different locations and for different age groups, as they would prefer, allowing the organization to make more sales and hence succeed in achieving its organizational goals. This consequently results in the development of the organization and hence leads to the success of the Industry.

On the other side, there are many improvements that have arisen as a result of the technological advancements in the movie production industry and the competition in that industry that has resulted in the venturing of more movie-makers into the film production industry. This has boosted the movie production industry due to the improved quality of the movies, leading to more demand for the movies in the market. Hence, due to the increased demand for movies, there are more people seeking to subscribe to the services offered by Netflix and other related organizations. This has hence led to increased sales for the Industry and the consequent success of the Industry (Thompson 4).

Using a Strategic Group Map identify & discuss the major “players’, their strategies, and how the strategies differ

There are different groups that use different strategies, and they are;

• Retailers such as Wal-Mart and Amazon.com, whereby they sold the videos to the customers directly from their outlets.
• Rental outlets, which included Blockbuster which rented out the videos at a small fee, and the customers would return the videos after viewing.
• Subscription services such as Netflix and Blockbuster, which allowed their clients their choice movies and then have them delivered at their doorsteps.
• Movie download websites that allowed their clients to download movies directly into their PCs or view them online and included iTunes.
• Cable TV channels such as HBO and Starz which allowed their clients to view different channels offering a wide variety of movies at a fee.
• Companies that offered Vending machines which allowed clients to purchase or rent their favorite movies.

Is the Industry attractive? Why and/or why not?

The Industry is very attractive to clients and many movie-viewers in the population. This is because the Industry allows flexibility and convenience for the clients as they are able to order movies from the organizations and get them delivered to their doorsteps. This way, they are able to get a wider variety of movies as well as arrange for better terms of payments to the organization.

This is hence a great advantage, unlike most of the other sources of movies where a client needs to make cash payments before getting the movies or even has to wait for sometimes before the movies are delivered to a nearby place where the clients can then access them. This is usually quite inconveniencing and not preferred by most of the movie viewers. The organization is hence able to capture the attention and interest of many clients in the industry and hence is more attractive than most of the related industries.

However, the organization is facing a lot of challenges in the current technology generation as many of its clients are shifting from the purchase of hardware format of the movies on DVDs and are preferring purchasing the movies in pure software format, especially through the use of the internet viewing and downloading which allows them to have the movies available in soft copy anywhere they are, and they can also easily share the materials on the internet with others unlike the case of DVDs which cannot be easily shared as if shared, it would mean the one who initially had a movie on a DVD couldn’t have it anymore.

Conduct an in-depth financial analysis with regards to profitability, liquidity, and growth, and then provide an assessment of the overall health of the firm’s finances

From the financial assessment of Netflix as an organization, it is clear that the organization has been incurring high expenses and running costs that have resulted in a decrease in its profits. This may usually be attributed to the ever-increasing and advancing technology that has led to more advanced modes of purchase, viewing, and even storage of the movies, especially through online purchase of the movies, downloading them online into the client’s computers and storing it in the client’s computer hard disc.

These modern methods allow quicker, safer, and more convenient modes of purchase, payments, and delivery of the movies where some of the movies are delivered almost immediately they are purchased instead of waiting for some time as is the case with the Netflix delivery services, which depend on the distance to be traveled and the efficiency of the mailing companies.

The organization, however, portrayed a high level of liquidity of all its assets and capital investments, unlike most of the other organizations that conducted their services in different ways and could usually not be able to liquidate easily. For example, an organization that fully depended on the internet for its delivery of movies to its clients and even employed online payment services for the payment for movies my clients would not be easy to liquidate as much of its capital investments and other investments are based online. However, due to the physical form of most of the investments in Netflix, the organization possessed a higher level of liquidity.

The organization was undergoing a lot of competition and even losing its competitive advantage against its competitors in the recent past. This may mainly be attributed to the technological advancements that are forcing many people to venture into other modes of purchase and delivery of products against the use of the normal physical delivery services that are now being viewed as outdated and limiting. Hence, the organization has been losing a lot of its clients to its competitors and consequently losing its competitive advantage against them. This has, in return, led to the slowed growth of the organization to a level where it is not able to achieve its organizational goals easily and takes a lot of time before achieving certain objectives, unlike the case in the past (Thompson 1).

The organization is hence in danger as it is on the verge of being totally overtaken by its competitors even as it loses hold of its competitive advantage, its profitability goes down, and its overall growth gets tremendously slowed down by the competition from other related industries. At this unsecured financial position, the organization needs to establish and implement better policies so as to be able to gain its competitive advantage against its competitors.

Using tools such as value chain and/or resource-based view identify the competencies and skills the firm has that provide the organization with a competitive advantage and summarize their impacts

The organization has got various factors that contribute to its competitive advantage against its competitors. One of the main contributors to the competitive advantage for the organization is the existence of very well-created and implemented marketing strategies that have acted as the main anchor for the advancement of the organization in the market. The marketing strategies applied are very effective and enable the organization to still maintain a large customer base, even with the rise of more competitors in the Industry. The creation of confidence and trust in the customers is a successful strategy that the organization has used as an assurance of the quality and reliability of the services that the organization offers to its clients.

In addition, the organization has a well-equipped labor force that, if properly utilized, could result in an improvement of the competitive advantage of the organization. Unlike most of its competitors, the organization actually carries out most of the processes involved in the purchase and delivery of services by the customers instead of outsourcing for more labor force to be used in such services as is the case with most of its competitors, especially the ones who apply internet services for the sale and delivery of the products (McConnel et al. 3).

Conduct a SWOT analysis of the company and describe its strategic relevance and summarize its impact

The organization had a lot of factors that contributed to its strengths and helped it gain a competitive advantage against its competitors. The organization was able to deliver products directly to the doorsteps of the customers hence making it more reliable and trusted by customers. The organization also applied methods of purchase and delivery of products that were very reliable, efficient, and convenient.

The organization, however, faced challenges that attributed to its weakness, especially due to the fact that it applied old and almost outdated modes of purchase and delivery of its products to customers. The organization failed to embrace and apply modern technology in service provision to its customers, and this was a drawback for the organization compared to its main competitors.

There were many opportunities that were at the dispensation of the organization. There was a probability of increased sales, returns, and even an increased competitive advantage for the organization against its main competitors if the organization was to embrace and apply modern technological advancements to its operations. This the organization would do in its sales and marketing strategies, services allowing the clients to purchase and pay for products from the organization and also in the delivery of the products, especially over long distances.

The main threats for the organization were the many upcoming cable movie channel providers as well as the movie websites that could allow viewing and download of movies to a customer’s computer. These competitors had an advantage as they employed the latest technology into their services and hence were usually preferred by clients. However, with the increase in the number of false and probably toxic websites that posed as movie download websites yet took advantage of clients’ in different ways, this threat was minimized as the clients still preferred to utilize the services from the organization, which were more reliable and efficient.

Competitive Strength Assessment (CSA) Matrix

The organization had more strengths compared to its competitors as it had a wider customer base due to the application of better marketing strategies and also due to the negative factors associated with its main competitors. However, there was a need for the organization to apply modern technology in its services in order to maintain its competitive advantage.

Hence, with the proper application of modern technology, the organization was still in a competitive position against its main competitors.

The firm’s present mission

The firm has a mission of offering quality services to its clients at an affordable and friendly price. This mission is a great one as it captures the needs of the customers of the organization and also helps to meet the requirements of the Industry at its time.

However, the mission does not have a provision for the assimilation of technological advancements and is hence nearly outdated. This is because there are a lot of technological advancements that have taken place and have revolutionized the way the movies industry and, more specifically, the delivery of movies to viewers is carried out. This has led to the invention of better and more reliable, convenient, and faster modes of purchase and delivery of products for the clients.

There is, therefore, a need for the organization to formulate ways of integrating its culture of service provision with technological advancements, a process that may lead to improved quality of service provision since the services could become faster, more reliable, and more convenient.

Identify the firm’s present generic strategy. Does the present strategy fit with market forces? What supporting strategies does the firm use to compete? Has it been effective in establishing a sustainable advantage?

The firm applied a strategy of selling products to the clients and then delivering them to their doorsteps. In this way, the organization was able to fit into the current demands in the market since most of the movie viewers preferred getting the movies delivered to them in a convenient way or having an easy movie access channel.

The organization has had a sustainable advantage against its competitors since its services are reliable, convenient, and cheap, unlike most of the other companies’ services that are either complicated or expensive.

What are the strategic issues the firm must address to be competitive?

The firm needs to address a few issues pertaining to the different strategies it is using in order for it to be able to gain a competitive advantage against its main competitors. One of the main strategies that need a reformation is the service delivery strategy, especially the actual process of delivery of the products to customers. In the current technologically advanced market, there is a need for an integration of modern technology into the delivery of the products to customers.

Most of its main competitors are implementing strategies that allow them to deliver the products to clients in their preferred format as well as providing services that allow the clients to view or acquire the products within a short time. There is, therefore, a need for the organization to formulate ways of addressing the issue of integrating technology into the delivery of its products (McConnel et al. 7).

The organization also needs to reform its sales and marketing strategies to include those applied using modern technology.

Most of its competitors are using modern technology to advertise for their products and to carry out other marketing processes. There is a need for the organization to implement such technology in its marketing strategies so as to catch up with its competitors and maintain a competitive advantage against them.

What strategic changes would you recommend to address the firm’s strategic issues?

The organization needs to carry out some strategic changes so as to be able to address the issues pertaining to its strategies. Such reforms may include the use of the internet and website services to carry out advertisements, allow viewers to see and select the products of their choice, make their payments online, and then have the products delivered to them physically. This would hence ensure greater improvement in the quality of the services offered and thus enhance the improvement of the competitive advantage for the organization against its competitors.

The organization may also be able to use faster and more reliable means of delivery of the products to the clients hence increasing its customer base, consequently increasing its competitive advantage. Such services may be cheaper to use hence may reduce the costs incurred by the organization even as they ensure quicker and more reliable delivery of products to the clients.

Works Cited

McConnel et al. Contemporary Labor Economics. 9th Ed. New York: McGraw-Hill/Irwin, 2009. Print.

Thompson, Arthur. Competition in the Movie Rental Industry in 2008: Netflix and Blockbuster Battle for Market Leadership. Englewood Cliffs: Prentice Hall, 2009. Print.

Netflix is one of the Silicon Valley giants and one of the most successful entertainment companies in the world. It rose to prominence by 2010 but in 2011 faced serious problems. Netflix lost 800,000 subscribers (Wingfield and Stelter par. 5), which was the first decline in membership in years. The reason was the decision to separate two primary services the company provided, DVD rental and video streaming. Unsatisfied with the new model, subscribers all over the United States heavily criticized Netflix, causing its stock rating to go down significantly. This case provides a valuable example of decision-making and strategic planning in the business world. To learn from this case, it is important to identify the problems the company faced, analyze the situation, and come up with possible solutions and recommendations.

First of all, the problems that Netflix had in 2011 have to be identified. The company introduced a new business model that was initiated by the co-founder and CEO Reed Hastings. It implied dividing the services that Netflix provided into two separate parts. Previously Netflix services had come with a single subscription, but since 2011 users had to acquire two different subscriptions, one for streaming and one for ordering DVDs by mail. Additionally, the right to both receive an unlimited amount of DVDs by mail and watch an unlimited amount of movies and TV shows over the Internet, which had cost most users 9.99 USD per month, became over 60 percent more expensive, 15.98 USD per month. The result was that Netflix received a lot of criticism from subscribers, analysts, and the market (Thompson 127). Over 800,000 members terminated their subscriptions. The stock price lost 43 percent.

Analyzing why Netflix faced such trouble should focus on the company’s internal decision-making as well as its response to new circumstances. First of all, it is important to understand why Netflix decided to separate DVD by mail service from streaming service. Hastings explained that, after 12 years in the DVD rental and delivery business, the company had wanted to focus on the new and rapidly developing sphere, namely streaming, so it decided to separate the two businesses. However, this explanation appeared online two months after the change had been introduced. Hastings admitted that he should have provided this information earlier (Thompson 128). Another thing that Netflix was criticized for is that they were separating their services at the time when the general direction of the market was to integrate services. Many other high technology companies were trying to make things easier and more accessible to customers, while Netflix introduced something that was ultimately less convenient to their subscribers.

Therefore, the recommendations for the case lie in the areas of communication and integration. Netflix should have communicated its reasoning behind the separation of services before the change was introduced. The company also should have explained what was being modified in terms of its services on the users’ end before facing extensive criticism. The analysis shows that much of the users’ dissatisfaction was caused by a misunderstanding of the new business model. Therefore, the negative response could have been mitigated through more elaborate communication. Another issue is that the business model itself was not successful from the very beginning. Splitting its business, Netflix made its subscribers deal with two accounts instead of one for the same services. Instead, the company should have followed the experience of other corporations that succeeded through integrating their services and creating more convenient conditions for their customers.

The Netflix case demonstrated interesting issues of the modern business world. Preoccupied with its organizational development, the company adopted a new business model that ultimately made its services less convenient and more expensive to the users. It also failed to communicate the reasons behind adopting the model, which caused users’ dissatisfaction and a decrease in the stock price. Lessons that can be learned from analyzing the case are to give priority to ultimate users’ convenience and to communicate extensively the essence and reasons of every change introduced.

Works Cited

Thompson, Arthur. Crafting & Executing Strategy 19/e: The Quest for Competitive Advantage: Concepts and Cases, New York, NY: McGraw-Hill Education, 2013. Print.

Wingfield, Nick, and Brian Stelter. “How Netflix Lost 800,000 Members and Good Will.”The New York Times. 2011. Web.

Netflix, Incorporated is a joint-stock public company that was incorporated in Delaware in August 1997 and is listed on the NASDAQ stock exchange. The company operates in the Music & Video Stores industry; under the entertainment sector. Its main competitors are Blockbuster and Amazon.com. (Investor Guide n. d).

The Company is owned by Mutual Funds such as Legg Mason Opportunity Prim, Goldman Sachs Growth Opportunities I, Fidelity Advisor Mid Cap II-A, Davis Opportunity B, Hussman Strategic Growth, Oppenheimer, Main St Small Cap A, Vanguard Small Cap Index, Goldman Sachs Tollkeeper A, Lord Abbett Developing Growth A, and Vanguard Total Stock Mkt Idx. (Investor Guide n. d)

In May 2002, the company completed its initial public offering. The Company provides more than 12 million subscribers with an online movie rental subscription service, and it has a comprehensive library where its subscribers can access more than 55,000 movies, television, and other filmed entertainment titles. Under the Company’s subscription plan, subscribers are allowed to have up to three titles at any given time with no due dates. The subscribers are not charged any fees for staying too long with the borrowed items, and they are not charged any shipping charges. Subscribers only pay a monthly subscription of $17.99. (Investor Guide n. d)

The Company accommodates a variety of movie-watching preferences by offering several subscription plans. The company’s proprietary recommendation service facilitates the selection of titles at the Company’s Web site by subscribers. The company then sends the selected titles on DVD to the subscribers by United States mail. The subscribers have an option of returning the DVDs to the Company via the Company’s prepaid mailers. (Investor Guide n. d)

The company can create a customized store for each subscriber by using its proprietary recommendation service. It is also able to effectively merchandise its comprehensive library of titles by using personalized recommendations generated by its proprietary recommendation service. (Investor Guide n. d)

The Company continually makes an effort to deepen its subscriber relationships by investing in improvements to its service. It also seeks to differentiate its service from that of its competitors by investing in improvements to its service. (Investor Guide n. d)

The Company’s main focus is to improve its website experience and functionality. It seeks to add value for its subscribers by including unique features such as Friends SM which is its social networking, and Profiles SM which is its queue management feature. The company offers a free trial period of 14 days. This motivates consumers to subscribe to the Company’s service. (Investor Guide n. d)

The Company has more than 55,000 DVD titles, which it purchased directly from studios, distributors, and independent producers. The Company has a network of shipping centers that enable it to ship and receive DVDs throughout the United States. (Investor Guide n. d)

Summary of conclusions

From the calculation of ratios, the following conclusions can be made.

Profitability Ratios

Net Profit Margin

We can observe from the ratios that the net profit margin was the highest in 2009 and that it has been increasing over the years. The net profit margin increased from 6.9 % in 2007 to 10.6 % in 2008 and 12.8 % in 2009. This was a 53.6 % increase in 2008 and a 20.8 % increase in 2009. This shows that the firm’s ability to earn income has improved over the years, shown by the increase in the proportion of sales that contribute to profit. (Graham, Smart, & Megginson, 2009).

The percentage increase in the net profit margin however dropped in 2009 as compared to 2008.

Return on Assets

From the ratios, we also observe that the return on assets has also been increasing over the years, from 19.9 % in 2007 to 33.1 % in 2008 and 59.1 % in 2009. This was a 66.3 % increase in 2008 and a 26.0 % increase in 2009. This shows that the management has been improving in its employment of assets to generate income, although the percentage increase in 2009 dropped as compared to 2008. (Graham, Smart, & Megginson, 2009).

Return on equity

We can observe from the ratios that the Du Pont return on equity has also been increasing over the years, from 19.4 % in 2007 to 45.1 % in 2008 and 107.6 % in 2009. This was a 132.5 % increase in 2008 and a 138.6 % increase in 2009. The percentage increase in 2009 was higher than it was in 2008. This shows that the management has been improving in its ability to generate income for the owners of the company; therefore the owners have been getting a higher return on their investment every year.

Conclusion

The company is good for investment because it offers a high return on investment, and I would include its shares in my portfolio. (Brealey, Myers, & Marcus, 2007)

Reference

Brealey, R., Myers, S., & Marcus A. (2007) Fundamentals of Corporate Finance. Irwin: McGraw-Hill

Graham, J., Smart, S., Megginson, W. (2009). Corporate Finance: Linking Theory to what Companies Do. South Western Educational Publishing.

Investor Guide (n. d). Investor Guide. Web.

One of the most striking modern economic trends is an increase in the market share of companies providing online services. These include mobile applications, websites, and, in particular, platforms that create media content like Netflix. The company’s position in this situation is extremely positive, as people tend to spend more time watching TV shows and movies at home. The main competencies of Netflix are the creation of high-quality products of great interest to the public. Mandal et al. (2017) state that the goal of the company “is to build a portfolio of movies which will attract and retain viewers and optimize the cost of licensing these movies in relation to the number of subscribers who watch them” (p. 155). Thanks to this, the company is the most influential player in the market and can cope with any competition.

There is also a trend towards increasing demand for educational products. The more opportunities there are for obtaining information, the more interesting it is for people to learn something new. Palvia et al. (2018) state that “As information and communication technologies have kept advancing, online education has become more feasible technologically, economically, and operationally” (p. 233). Netflix is also trying to develop in this area, for instance, by creating science-related movies. Since they are in demand, their ratings are considerably high, which allows the company to compete with many educational platforms. In addition, this generally has a positive effect on society.

The strategic development of Netflix is aimed primarily at meeting the needs of the audience. The organization creates the content that is most suitable for viewers and thus forces them to return to the platform to view something new. This strategy is sustainable because it is based on changes in the world and can adapt to them. This has already led Netflix to active development and, undoubtedly, contributes to further growth.

References

Mandal, G., Diroma, F., & Jain, R. (2017). Netflix: An in-depth study of their proactive & adaptive strategies to drive growth and deal with issues of net-neutrality & digital equity. IRA International Journal of Management & Social Sciences, 8(2), 152-161.

Palvia, S., Aeron, P., Gupta, P., Mahapatra, D., Parida, R., Rosner, R., & Sindhi, S. (2018). Online education: Worldwide status, challenges, trends, and implications. Journal of Global Information Technology Management, 21(4), 233-241.

Introduction

Netflix, a popular subscription-based online movie rental service, was founded by Reed Hastings in the late 1990s. Originally based in the U.S., it utilized postal services to deliver DVDs directly to its subscribers’ homes. In 2011, Netflix decided to migrate from its business model of delivering DVDs by mail to streaming media content and movies directly to its subscribers’ televisions. To secure its profits, the company started to charge more for receiving DVDs, which should have been perceived as a minor add-on to the existing customers’ original subscription arrangement. However, this move led to a big problem as a number of subscribers defected and Netflix’s stock price dropped. The company faced the dilemma of how to remain profitable in the video streaming business while dealing with competition and paying much more for content (Chatterjee, Barry, & Hopkins, 2016). This paper discusses the key marketing strategy issues in Netflix’s business model and suggests recommendations on how those issues should be handled.

Main body

Netflix’s business model has been considered highly successful. However, one may notice several strategic issues that existed in the process of the company’s development. First, Netflix decided to follow the path of famous internet brands like Amazon, choosing a similar business model. Unfortunately, the company did not realize it because of competitive advantages with other retailers until discovering that the customers would not return after having their first negative experience. Second, Netflix is completely dependent on other studios’ content, which provides the suppliers with extreme power over the company. Third, Netflix did not take into account the bargaining power of its customers who, if left unsatisfied, might choose to decide to spend their money on alternative products or services. All these issues have led to the most critical and urgent problem in Netflix’s business, which is customer loss (Chatterjee et al., 2016). Also, the company currently faces increasing competition, with Disney being the most significant threat, and has to deal with rising content costs (Lobato, 2019). Hence, customer acquisition, along with the creation of its own content, price increases, and separation of Netflix’s services, can be suggested as the main strategies to improve the company’s business performance.

First and foremost, it is vital to take into account that Netflix depends on its customers’ disposable income, meaning that the slow growth of economic rates would immediately impact the customers’ purchasing power and the company as a whole (Chatterjee et al., 2016). In such conditions, it becomes essential for Netflix to price competitively against its rivals to maintain its competitive advantage. Though low price, no late fee policy, large selection, and free shipping are among the company’s strengths, price increases will allow this streaming video giant to show more flexibility in managing its costs. Second, Netflix should invest more in the production of its own content targeted at a broad audience. Seeing as the company might be influenced by copyright law changes, creating large-budget mass films and shows will allow Netflix to compete with such streaming services as Disney, WarnerMedia, and Apple. In addition, it will give the company an opportunity to maintain attractiveness, thus developing new customers and retaining old ones, as well as sustaining its market share.

Obviously, maintaining new subscriber growth is the main issue for Netflix. Currently, Video on Demand has a significant impact on the company’s performance as this service is more convenient than DVD rental. Given the fact that the Internet and technology have changed people’s daily lives, it becomes evident that the company working in the context of online business should keep up with this continually evolving and developing sector to sustain its success. However, although the world slowly progresses from physical DVD systems to digital streaming, evidence shows that the DVD rental industry grosses every year (Lobato, 2019; Sadq, 2015). This suggests that Netflix might tap into this growing business and expand into markets, even though the decision to migrate from its old business model in 2011 has led to negative consequences. Based on this information, separating its services instead of combining them will be a wise decision for Netflix that will allow the company to expand internationally and remain the leader due to its scale, advanced technologies, and original content.

Conclusion

To conclude, Netflix is a popular subscription-based online movie rental service that decided to respond to the continually changing society and science technology sector and migrate from delivering DVDs to streaming media content and movies directly to its subscribers’ televisions. However, the company’s decision to charge for receiving DVDs led to customer loss, leaving Netflix at a crossroads and with questions about whether it should return to combining its services or continue with two separate services and live with the negative consequences. Analyzing current evidence and key strategic issues in Netflix’s business model has generated recommendations that customer acquisition, along with the creation of its own content, price increases, and separation of Netflix’s services, can be suggested as the main strategies to improve the company’s business performance. As suggested, such an approach will allow the company to maintain its competitive advantage and compete with such streaming services as Disney, WarnerMedia, and Apple. In addition, it will expand into international markets, thus maintaining new subscriber growth, as well as sustaining its market share.

References

1. Chatterjee, S., Barry, W., & Hopkins, A. (2016). Netflix Inc.: The second act – moving into streaming. London, Canada: Ivey Publishing.
2. Lobato, R. (2019). Netflix nations: The geography of digital distribution. New York, NY: NYU Press.
3. Sadq, Z.M. (2015). Analyzing Netflix’s strategy. International Journal of Science and Research, 4(3), 2271-2273.

Starting as a simple DVD rental 20 years ago, Netflix nowadays is one of the most extensive video-streaming services covering almost all parts of the world. The interface of the service and its huge source of films, series, and TV shows put it on top of providing streaming entertainment. This essay will focus on possible Netflix recommendations, such as financing the gender equality campaign, keeping lower costs, and increasing customer benefits.

Gender Equality Campaign

Gender equality in the entertainment business is one of the core values of Netflix, as it constantly strives toward equal opportunities and rewards for all genders. Throughout the campaign, Netflix encouraged and promoted equality regarding films and series streamed by the service. The principal or co-leading roles in TV shows and movies were overwhelmed with men in 2018, and the campaign results are quite positive toward equality. After the year of campaign promotion, it could be seen that the rate of women leading films grew almost by 5% percent, from 46.4% in 2018 to 50.9% in 2019. Series have seen even more rapid changes, as the primary role occupied by women rose from 50.6% in 2018 to 57.7% in just one year (Smith et al., 2021). The powerful campaign for equality and support for minorities advanced the brand’s image on the streaming services scene. A streaming service that supports equality and respect toward minorities has powerful credibility and a broader target audience to increase income and enhance promotion.

Campaign finance

The marketing campaign of gender equality that is being exercised nowadays by Netflix earns the respect of viewers and increases their loyalty and trust in this streaming service. However, supporting this campaign means creating equal opportunities for all genders, allocating resources, and promoting it. In order to stay effective, the campaign needs constant improvement and financing. Possible campaign financing could be advertisements through partnerships with the same values toward respect and equality. Brand responsibility is a severe topic nowadays, and advertisements of Netflix should take gender equality into account while promoting ads on the service. Partnerships and advertisements that focus on gender equality, respect, and acknowledge minorities are perhaps the best options to budget the campaign (Champlin et al., 2019). Moreover, partnerships that are based on gender equality do not only provide money and resources to pursue the campaign but promote it during the process of advertisement. Last but not least, Netflix could allocate funds to advance the gender equality campaign from the income generated by the company’s subscription model.

Optimization of prices

Today, the subscription prices of Netflix are affordable in countries with a stable economy. However, Netflix should create a long-term plan that does not mainly involve increasing subscription prices. Holding the prices on the same low level and optimizing income and efficiency without increasing the subscription price is crucial for Netflix. Stimulating profit without increasing subscription prices, which are a significant source of income, is challenging, but Netflix achieved it by investing around $6.3 billion in 2017 in creating its original content. As a result, the company reached an overall capitalization of about $130 billion in 2018 (Venkatesan et al., 2020). In order to continue the trend of increasing revenue, the company must maintain a strong brand image that supports equality and shares the values of respect and represent these values in their original series and films. The powerful image of the company is crucial to keep the customers, as the primary source of income is subscriptions and advertisements.

Customer Benefits

Attracting more revenue, increasing the spectrum of customers, and enlarging the company is an essential aspect of any business. However, keeping the existing customers by improving customer advantages is paramount. First, the price of the subscriptions needs to be controlled; by lowering the costs, the company could improve customer benefits. Maintaining the price is an essential part of the competition in the market; for instance, Apple music was the best streaming service along with Spotify, and they charged around 10$ monthly. Although, Amazon has entered the music streaming market by shocking $3.99 a month on its device. As a result, a portion of Apple’s and Spotify’s customers have chosen Amazon. Moreover, the brand responsibility should be followed, and the company must remain credible in front of its customers. Massive companies such as Netflix must strive toward human progress by supporting equality and respect. Companies that share the same values with their customers are prone to customer loyalty and increased customer benefits (Chen et al., 2017). Working on quantity rather than the quality of a price may be a favorable option to increase customer benefits to Netflix. The company could reduce the subscription fees to customers that are subscribed for more than five years by 25%, thus showing that it values its customers.

In order to stay on top of the streaming services, Netflix should focus on various aspects of promotion and customer acknowledgment. The company should encourage gender equality through proper partnerships, control the prices, increase the quality of services and establish progressive values that resemble the beliefs of its customers.

References

Champlin, S., Sterbenk, Y., Windels, K., & Poteet, M. (2019). How brand-cause fit shapes real world advertising messages: A qualitative exploration of ‘femvertising’. International Journal Of Advertising, 38(8), 1240-1263.

Chen, Y. M., Liu, H. H., & Chiu, Y. C. (2017). Customer benefits and value creation in streaming services marketing: a managerial cognitive capability approach. Psychology & Marketing, 34(12), 1101-1108. Web.

Smith, S. L., Pieper, K., Choueiti, M., Yao, K., Case, A., Hernandez, K., & Moore, Z. (2021). Inclusion in Netflix Original US scripted Series & films. INDICATOR, 46, 1-36.

Venkatesan, R., Gibbs, S., & Shively, D. (2020). Netflix, Inc.: The mouse strikes back.SSRN Electronic Journal, 1-7.

External Opportunities

1. Low-Cost Mobile Streaming Option – In order to attract and keep members in the global market, Netflix can provide a more affordable option. In India, Netflix has been trying a $3/month mobile-only subscription (Netflix, 2021). It can broaden this more affordable choice internationally to compete more successfully with less expensive options like Apple+, Disney+, Peacock, and so forth.
2. Take advantage of the ad-based business model. Companies like Google, Facebook, Amazon, and many more earn billions of dollars from advertisements. By switching to a business model centered on advertising, Netflix may increase its income.
3. Increase Global Customer Base – With such a sizable, present subscriber base, Netflix may grow its services and subscribers to many other nations. They might start concentrating on the nations where it is not yet accessible (Netflix, 2020). In recent times, Netflix increased the number of countries in which it operates. Nevertheless, it is still not available in Syria, North Korea, Crimea, or China.
4. Update Material Library – By growing the relationships with various movie distributors, it may increase the licensing of its content. Netflix should also update its catalog of available content now that it is creating original programming.

External Threats

1. Pressure from the competition – There are other companies that offer digital streaming globally. Every year, its rivals grow more numerous: Disney+, HBO, Apple TV+, Hulu, Amazon, and YouTube are consistently challenging Netflix by providing its users with ongoing access to the fresh and original content.
2. Government Regulations – In many countries, providers like Netflix may face severe restrictions from the government. For instance, given China’s restrictions on foreign material, Netflix’s growth there is improbable.
3. Piracy – Due to hefty monthly fees that many people cannot pay, online piracy is at an all-time high, with millions of individuals across the world finding methods to obtain media material. It poses yet another serious danger to Netflix.
4. Market saturation – Netflix increased US members by 420,000 in Q4 2019, falling short of its goal of 600,000. It had a target of 218,000 members in Canada but only added 125,000. Due to market saturation, North American membership growth has slowed for the third consecutive quarter (Sherman, 2020). Due to market saturation, Netflix will have a harder time acquiring new users in the future.

Porter’s Five Forces Analysis

Netflix competitor’s analysis demonstrates that competition in the streaming market is a strong force. Due to the expenses and limited profitability, there are observable hurdles for new entrants. For businesses who are currently active in the market and are attempting to implement this operating model, it is, nevertheless, quite simple. Another powerful influence is the danger posed by new competitors. Only a few newcomers to the market are successful since it takes time to fully understand what customers want.

Since there is a very low switching cost for consumers and virtually all services are provided at a very little price difference, the bargaining power of suppliers is a strong force. Additionally, because users pay every month, the five forces model proposed by Netflix cannot be based on year contracts. In the market, there aren’t many alternatives to the material. In Netflix Porter’s five forces, the threat of substitute services is, therefore, moderate. Companies who produce the same material for DVDs or streaming pose a threat to Netflix. The availability of other pastimes and entertainment options, though, poses a greater danger.

References

Netflix. (2021). 2021 Annual Report.

Netflix. (2020). 2020 Annual Report.

Sherman, A. (2020). Netflix paints a happy face on growing threat of US competition.

In order for managers of minor and major companies to be successful with their decisions, it is essential to be closely acquainted with an extended number of business concepts and apply them properly. For instance, it is rather beneficial for leaders to understand the concepts of income and price elasticity, and numerous real-world examples prove that specific changes in price may be risky but beneficial. The purpose of this paper is to talk about income and price elasticity and provide Netflix’s decision as an example.

To begin with, it is necessary to explain the value of the two business concepts. As noticed by Hayes, “income elasticity of demand refers to the sensitivity of the quantity demanded for a certain good to a change in real income of consumers who buy this good.” Therefore, it describes the connection between the income of a customer and their demand for a certain product. Further, price elasticity of supply refers to measuring the effect of changes in price on the demand and supply of goods (Hayes). Therefore, the leaders of companies need to be able to apply these concepts properly in order to predict how changes in prices or customers’ incomes may affect supply and demand.

There is a real-life example of a major subscription streaming service increasing its prices. According to Wingfield and Steltern, in 2011, Netflix changed its subscription prices and made customers pay about sixty percent more for each month. Since the company needed money to expand and upgrade its library content, the leaders made this choice despite the protests of the subscribers. Surely, there was a temporary loss of customers because their incomes did not increase, but the expansion of the library attracted new clients. Thus, it is possible to say that Netflix managers can apply price elasticity successfully.

Works Cited

Hayes, Adam. “Elasticity.” Investopedia, Web.

Wingfield, Nick, and Brian Stelter. “How Netflix Lost 800,000 Members, and Good Will.” The New York Times, Web.

Introduction

Growth management in any organization is vital for entrepreneurial success once the formal business registration and inception processes have been completed. Various business stages present different challenges and opportunities which require a portfolio of provisions such as outstanding leadership, continuous product improvement, and understanding of the market. Managing growth in the entrepreneurial sector, therefore, necessitates an innovative approach by the stakeholders to ensure the businesses succeed (Bhatia, et al., 2021). Netflix, Tesla Motors, and Zoom are among many other companies that have experienced exponential growth in their markets.

Strategic Focus During the Companies’ Early Growth

Netflix is a company operating in the entertainment industry focusing on the use of technology to grow the customer base and eventually the revenues. At its early growth stages, the company’s strategy was to continue improving the entertainment products to reach out to a wider market (Mier & Kohli, 2021). In the early stages, Tesla Motors was guided by the strategy of doing something different from the other players in the market. The leadership of the company wanted to disrupt the status quo by the introduction of environmentally sustainable car products (Thomas & Maine, 2019). Zoom was designed to disrupt the normal way of meeting where people would physically avail themselves in physical offices. The founder had a strong vision that something needed to be done to enhance effective web conferences (Archibald, et al, 2019). Zoom’s strategy at the early stages involved constant improvement with a focus on creating a seamless consumer experience.

Core Areas of Focus

The three companies leverage on different aspects to strategically position themselves in the markets and satisfy their customers. Netflix has grown into a great venture and its geographical outreach has expanded to a global status. The company thrives on innovation to create an undisrupted customer experience. Netflix also has a wide range of entertainment products from which subscribers can choose. The system is operated using an advanced streaming technology that personalizes subscribers’ experiences (Rataul, et al, 2018). The company’s technology can effectively suggest other movies a subscriber can find entertaining based on their past preferences and tastes.

Tesla Motors leverages on many years of experience in innovation geared towards improving the experience of their customers. The company has a diversified portfolio of products ranging from luxury cars to efficient heavy long-haul trucks (Chen & Perez, 2018). Similar to Netflix, Zoom depends on a powerful technology that offers a simple and efficient user experience to facilitate web conferencing. The three companies strategically position their brands for increase their profitability.

Changes of Strategies in Later Growth Cycles

Netflix and Zoom share a similar path in the way their strategies shift in their later growth cycles. These two companies have concentrated on market analysis and classification to ensure that their products satisfy the needs in each market. Having developed their software technology to be of astounding quality, they now focus more on customer value delivery. Tesla Motors also banks on effective leadership and partnerships with other emerging technologies such as cryptocurrency. These provisions enable Tesla Motors to sell directly to customers unlike other players in the market. Tesla minimizes costs related to middle dealings between the company and the ultimate customers (Chen & Perez, 2018). By creating a working value chain, the company’s leadership can further their research on different markets to continue to deliver high-quality products.

Some Peripheral Markets

Netflix is available in many countries apart from the United States of America. The company has reached a global market level service in more than 190 countries with its great streaming services (Mier & Kohli, 2021). In each country, the content supplied is different based on language, culture, and preferences of customers in the specific markets. Similarly, Zoom is available globally since it is a web-based conference tool. It has gained a lot of recognition during the Covid-19 pandemic when in-person meetings are being discouraged by health officials (Archibald, et al, 2019). Some peripheral markets for Tesla include China, Netherlands, Hong Kong, and Australia. The company sells physical products, unlike Netflix and Zoom whose brands are services based on the internet.

Growth by Acquisitions

Netflix has so far grown without acquiring another business on the way. Zoom is currently considering the acquisition of a company called Five9 that makes software for contact centers. This acquisition could add to the company’s services and revenue lines making the business more profitable if well managed (Levi, 2021). Tesla has made several acquisitions in its lifetime to enhance its business and make its operations more efficient. SolarCity Corp. is an example of companies acquired by Tesla in 2016 (Song, 2019). Other companies similarly acquired by Tesla are Maxwell Technologies Inc. and Perbix Machine Co. Inc.

Conclusion

Entrepreneurship is a continuous process comprised of challenges and opportunities in the different growth cycles of businesses. It requires a combination of an entrepreneurial skillset, mindset, and leadership capabilities to steer a business on the right path. Strategic positioning is always critical at all stages as evident in the three companies discussed. Starting an investment might not be an easy task but leading the business through the growth cycles can equally be challenging. However, with steadfast planning and visionary leadership, companies can achieve successful rapid growth.

References

Archibald, M. M., Ambagtsheer, R. C., Casey, M. G., & Lawless, M. (2019). Using Zoom videoconferencing for qualitative data collection: Perceptions and experiences of researchers and participants. International Journal of Qualitative Methods, 18, 1609406919874596. Web.

Bhatia, R., Bhatia, A., & Banerji, B. (2021). Entrepreneurship development: Managing change and complexity with innovation. Psychology and Education Journal, 58(2), 5159-5171. Web.

Chen, Y., & Perez, Y. (2018). Business model design: Lessons learned from Tesla Motors. In In: da Costa P., Attias D. (eds) Towards a Sustainable Economy (pp. 53-69). Springer, Cham. Web.

Levi, A. (2021). Zoom’s lightning-fast ascent to $100 billion made big acquisitions a sudden priority. Web.

Mier, J., & Kohli, A. K. (2021). Netflix: Reinvention across multiple time periods, reflections, and directions for future research. AMS Review, 1-12. Web.

Rataul, P., Tisch, D. G., & Zámborský, P. (2018). Netflix: Dynamic capabilities for global success. SAGE Publications: SAGE Business Cases Originals. Web.

Song, K. (2019). Does the acquisition of SolarCity benefit Tesla’s shareholders?. In 2019 International Conference on Economic Management and Model Engineering (ICEMME) (pp. 536-538). IEEE. Web.

Thomas, V. J., & Maine, E. (2019). Market entry strategies for electric vehicle start-ups in the automotive industry–Lessons from Tesla Motors. Journal of Cleaner Production, 235, 653-663. Web.

Wiederhold, B. K. (2020). Connecting through technology during the coronavirus disease 2019 pandemic: Avoiding “Zoom Fatigue”. Cyberpsychology, Behavior, and Social Networking, 23(7), pp. 437–438. Web.

Introduction

Almost all people like movies or series because watching TV is the most popular way to escape various challenges and relax after a long stressful day. In the age of the rapid development of technology, people do not have to go to the cinema, buy CDs, or turn on the TV to get acquainted with new products of the film industry. Now viewers can watch films, series, cartoons, and TV shows online. To date, one of the largest world’s modern multimedia companies is Netflix. The chance to meet someone who has never heard about Netflix is ​​minimal. This name is on everyone’s lips, as the service conquered millions of hearts worldwide and earned billions of dollars. The entertainment media company not only allows watching movies anytime and anywhere but also produces its films and TV series.

The History of Success

In 1997, Netflix was established in California as the first online DVD distribution store. Its founders, Marc Randolph and Reed Hastings admired the company Amazon and wanted to create a similar business idea. At that time, there was a popular legend that this idea came about after Hastings had been fined $40 for the late return of a copy of the film Apollo 13. The entrepreneurs were able to establish such a company due to money raised from the sale of Pure Software, which had belonged to Randolph. To protect from dishonest clients, Netflix only allowed new discs to be borrowed after customers returned the old ones. In 2010, the company entered the international market due to the appearance of streaming. In 2013, Netflix started the production of its films, series, and television programs.

The Major Achievements

Netflix has 209 million paid subscribers worldwide and ranks third on the list of US residents’ preferences. The company receives about 8 million new subscribers every quarter.

More than 100 Netflix films, series, and various programs are released annually. In 2016, for instance, the company released 126 TV series and movies – it is more than any other network or cable channel. Recently Reed Hastings announced that their service is available for user registration in 190 countries around the world. In 2019, this company was recommended for an Oskar in fifteen nominations and received three awards (for Best Direction, Best Cinematography, and A Film in a Foreign Language (the movie Roma)).

Reed Hastings has also set up a $100 million charitable foundation to support educational programs and projects.

The Main Strategies of Netflix

The company’s central values are:

• honesty and ethical behavior, including in dealing with conflict situations;
• complete, accurate, and understandable reporting, including the release of financial statements;
• excellent service, quality products, and reasonable prices.

As for the main strategies of Netflix, it is necessary to highlight the following:

1. The transition to online format: in 2007, the company refused to send out discs and began to work in an online format, increasing its audience.
2. The transition from distribution to production: Netflix decided to create unique content and now offers viewers not only the expected films and series but also produces high-quality movies;
3. The audience research and statistical algorithms: the company has accumulated customer data (age, languages, preferences in genres of cinema and actors) in the database for years and carefully analyzed them before starting filming.

Functioning of Netflix in different countries

Although Netflix has subscribers from 190 countries, not all its products are available in these states. If lists of Netflix films are compared in the United States of America, the United Arab Emirates, and the countries of the Middle East and North Africa, the following will be noticed:

• Netflix’s American list consists of 3449 items;
• The UAE has 300 movies and about 1000 TV shows with free access;
• Residents of several countries of MENA (Iran, Saudi Arabia) can watch more than 100 films;
• Residents of Morocco can watch only 39 movies;
• Syria has no access to the Netflix list because of US sanctions.

Cultural Differences in Cinema

Considering that Netflix shows its films to residents of 190 countries, it must take into account cultural differences in the mentality of various people. The film market is considered from three points of view: film supply, film distribution, and film demand. Netflix has concluded that viewers choose the movie according to the following details: the director’s name, nationality, year of production, ranking, quality, and presence of star actors. Moreover, there are specific distinctions in the understanding of several concepts in different countries. Filmmakers have to be careful about matters that relate to religion. The Last Temptation of Christ, for example, was deleted in several states. The movies, which have a hint of the country’s politics, are also often deleted (the episode of Patriot Act with Hasan Minhaj was not appreciated in Saudi Arabia).

Considering that the main part of viewers consists of women, filmmakers should understand that the concepts of “marriage”, “divorce”, “unwed mother”, and “working mother” in the USA and the MENA countries are also different.

Conclusion

Netflix understands all these nuances and offers the streaming of movies with specific titles in different countries. Sometimes, the company chooses to pay the studio-demanded price to change a heading in one state to ensure that the audience will watch the film. To avoid conflict with companies from other countries, Netflix also limits the number of films that travelers can watch. Despite this, the company offers paid access to content without geographic restrictions, attracting new subscribers.

Thus, Netflix is one of the multimedia giants that has been successfully operating for more than twenty years. Its high-quality content allows it to develop not only in the USA but also in Europe, in the countries of the MENA, and in other corners of the world.

References

Rosenberg E. (2021). Why Netflix’s content is different abroad.